What's to stop newspaper owners from pocketing money from the Local Journalism Sustainability Act?

 The Local Journalism Sustainability Act has been reintroduced to Congress. Full bill here.

And, given that it would use taxpayer money to help people buy subscriptions, and its pricing level is clearly targeted to help six-day community dailies of 3,000 circulation or above, up to small seven-day dailies, rather than focusing on smaller daily and non-daily papers, then sliding out to partial support of larger community dailies, my question is not facetious.

On the second credit, for hiring journalists? A 100-hour per quarter standard for an employee's work is WAY too low. Remember, there's 13 weeks in a quarter. A newspaper owner would get a tax credit for hiring any new employee that works more than 8 hours a week.

The advertising tax credit? There's a loophole there. I presume lawyers could use this money to run the "notice to creditors," "letters testamentary," etc. that they have to already.

I don't know what, if anything, could be done to fix the first credit.

Second credit, I do. 250 hours a quarter would be about 20 hours a week for an employee. I mean, 8 hours a week? That's an invitation to reverse-loophole your "independent contractor" delivery drivers for a print newspaper. And, yes, people who run hedge funds and also own newspapers would work on a way to do that.

Address the loophole on the third credit.

(I Tweeted America's Newspapers CEO Dean Ridings at his personal and the America's Newspapers Twitter accounts raising in brief the issues on No. 1 and 2. And, have heard bupkis back.

Update, Aug. 27: I have just tweeted this to the National Newspaper Association. We'll see if I get any more response.)

Also, "local newspaper" needs to be made smaller than "750 employees" on max size. That current definition would allow just about any paper up to Dallas Morning News size (and maybe including the Snooze by now) to qualify. Most Alden-owned papers, including Dead Fucking Media/Media Snooze papers would qualify. Most of New Gannett/Craphouse would qualify. McClatchy papers, now also also hedge-fund owned, would qualify. Yes, "regional or local" is in there, but, you know what? Per media analysts, anything smaller than the New York Times, Washington Post, Wall Street Journal, USA Today by default and just maybe the L.A. Times is considered by them to be "regional" and not "national." And, unless that number is moved down to, say, no more than 500, the Aldens of the world would use it as an excuse for further job-slashing to qualify for the payola.

I mean, in the ad credit section, it restricts THAT to small businesses of less than 50, the standard federal definition.

And, speaking of? I see nothing in the language of the bill that says something like: "This offer shall not include any newspapers owned by hedge funds." (Since this is not criminal law, it's not a bill of attainder and carve-outs are totally allowable.)

So, in the end?

Hard pass, as both an informed taxpayer in general AND an informed taxpayer who's also a newspaper editor. Because, the answer to my rhetorical question above is "nothing."

Besides, there's a much, MUCH better way to do this, and to actually target real community newspapers. (It's by no means original with me.)

And, that's to increase funding to the Ad Council and to require it to buy spots in community newspapers. This was first mentioned at the height of COVID. Could be done right now with things like reminders not to leave kids and pets in hot summer cars. Or don't drink and drive paid PSAs.

Sidebar: It IS interesting to see that the bill's cosponsors are almost totally Dems.

I work in the fifth-worst career, part 3 - advertising revenue

Last week, I blogged about the fact that a certain careers website said that journalism was the first worst job/career field right now, noting that, from the inside, that was no surprise.

Well, I'm probably going to do a few follow-up posts, looking at more specific issues.


Today, I throw out more specific ideas about advertising and circulation/paywall issues.

First, although paywalls aren't the answer, they're part of the answer. Period.

Newspapers are reporting more of their ad dollars are coming from the web, but that's because hardcopy ad dollars continue to sink, even as the country partway comes out of the recession. Newspapers need to get honest with themselves and permanently write off half of their hardcopy losses since 2007. And, that may be conservative.


Until newspapers do this, and accept this, they're not going to be able to better address the future, not just at individual newspaper levels, but at corporate levels.


As for the current disparity between traditional web ad rates and mobile-specific ad rates, reportedly as high as 5-1? Within in a decade, that difference will be no greater than 2-1, driven primarily by greater use of mobile devices, greater competition for eyeballs, etc.

Remember how much higher traditional web ad rates were a decade ago? The same things drove them down as will drive down mobile rates. More mobile-specific content, portals, and sites increases openings for ads and competition for eyeballs gets more scattered. Ergo, rates go down.


So, looking ahead to the future, newspapers need to be honest about that, too.


The Net, in its various delivery forms, has just the opposite problem as old newspaper media. You got plenty of room for editorial content, of course, but, because of ephemeral attention in many cases, there's limited "space" for ads. Plus, add in ad-block software, etc., and web rates plummeted.

I have no doubt that for both Android and iOS for Apple, somebody will invent the equivalent of ad-block programs, too. It's going to happen. Somehow. Jailbreaking of specific apps as well as mobile operationg systems will be involved, in all likelihood. But, it will happen.


The even bigger thing is that corporate chains have probably not even fully digested that 25 percent profit margins, along with hardcopy ad riches, are gone for good. I think many of them think that the much lower overhead for the Net will alleviate that. But, if Net dollars are dropping, or flat, still, and mobile dollars, while rising, are still smaller potatoes yet, that's not a "replacement." Plus, per part two of this series, as readers often demand fancier content, the overhead differential probably isn't quite so great as these owners imagine or hope.


So, back to those profit margins. Owners, and investors, need to digest that the day of 20 percent margins, even, for even the biggest dailies, are gone. Even with two more years of economic recovery, they need to get comfortable with 15 percent as "good." And, therefore, to stop laying off ever more editorial staff, cutting content, etc., while rewarding the CEOs who do that.


Think of this as the dot-com boom in reverse. The worst of the dot-com financial bust for papers is over. BUT ... not all of it is over. AND ... not all the lessons have been learned.


On circulation? A dollar is as high as even big metros outside the two coasts (and I really mean coastal California, on one hand, and the Boston-DC axis on the other) can go for several years. Ditto for the $3 mark on Sundays. That's your ceiling.


I'm glad to see a major metro like the Dallas Morning News has therefore finally gotten into the paywall spirit. I don't currently live in Dallas, so I wouldn't pay, and I don't know how much it costs. But, it was needed. That's even as, here in central Texas, the Austin American-Statesman, still free online, bleeds even more.


Of course, the AP, and now, Reuters with a largely expanded American presence, and somewhat AFP, have to be in the mix. Not all three can jointly deal with rates for news aggregators without explicit Congressional antitrust waivers, of course. But, individual papers can only do so much.


Of course, AP's long-term chairman of the board, Dean Singleton, was as stupid about this issue with AP as he ultimately was with the finances of MediaNews, running it into bankruptcy.


And, why didn't a court impose a five-year hiatus on him buying newspapers after getting out of Chapter 11? That could be a blog post by itself.

Is #AP prostituting itself?

Possibly, if you look at this story:

The Associated Press said Wednesday that it has entered into a partnership with WhoSay Inc., a company that helps celebrities manage interactions with fans through social networks and traditional media outlets.

The AP will give celebrities who are members of WhoSay the option to provide exclusive, personal photos and videos to the AP for licensing to major media companies worldwide. ...

The company puts celebrities in greater control of —and offers the opportunity to profit from— their photographic lives. It also allows them to spread their social media posts easily across sites like Twitter and Facebook. As an example, (Sofia ) Vergara posted a picture of a family lunch in Miami last month. The photo has a copyright symbol, indicating she owns it and can make money from it if, say, a magazine wants to publish it.

At the least, it sounds like it's cheapening itself. Basically, WhoSay looks like an elitist version of Twitter. Which makes it look very much like AP is doing celebrity butt-kissing. Great. AP's entertainment feed will look like TMZ soon.

And, shock me that Dean Singleton, as ongoing chairman of the board (who should have been canned when MediaNews filed Chapter 11) would think this is a wonderful idea. Hell, look at AP's whole board of directors.

Singleton/MediaNews? Chapter 11. Mary Junck/Lee Enterprises? Chapter 11. Donna J. Barrett/CNHI? Should be in Chapter 11, but, being owned by the Alabama state pension system, probably can't be. Craig A. Dubow/Gannett? Should be. Still doing mandatory furloughs, isn't it? Michael Golden/New York Times? The company that has a fake paywall and lies about it. Paul C. Tash/St. Petersburg Times? Lives on its Poynter reputation. Katharine Weymouth/Washington Post? Would be in Chapter 11 if not for Kaplan. Gary Pruitt/McClatchy? Wouldn't surprise me if it winds up there.

As Michael Hirschorn at The Atlantic notes, it's precisely strategies like this that have made the general public undervalue daily newspapers for years if not decades. Add in the AP board originally selling its content to online aggregators for pennies, and the circle is complete.

Big newspaper merger ahead?

Freedom Communications and MediaNews, both partially owned by the same capital management group, Alden Global Capital as part of their emergence from bankruptcy, could merge.

It seems pretty clear this is NOT MediaNews driving the process. Dean-O, Dean Singleton, CEO of pre-bankruptcy MediaNews, is being kicked upstairs:

MediaNews on Tuesday announced a series of management changes under which current chairman and chief executive William Dean Singleton will relinquish his CEO role and become executive chairman of the Denver-based company. In a news release, MediaNews said the moves, which also include the hiring of three new directors, will "position the company to identify, pursue and execute on strategic consolidation opportunities."

That said, they aren't the only merger possibilities on Alden's list.

The recession and its fallout have depressed media properties. With folks like Alden either in control, or threatening to become in control, of more and more media chains, they're surely going to throw their weight around more.

Old media + big banks = stupidity squared

Looks like old Dean-o Singleton won't have much ownership anymore in Media News, though Bank of America is going to still let him run the company. (Thereby showing that the stupidity of big banks and that of big Old Media folks is probably about equal in the past five years.)


From the AP:

By MICHAEL LIEDTKE
AP Business Writer

SAN FRANCISCO (AP) — Another newspaper publisher desperate to dump debt has filed for bankruptcy protection in hopes of recovering from an advertising meltdown that has obliterated much of the print media’s revenue.

Friday’s late filing by Affiliated Media Inc., the holding company of MediaNews Group, had been expected. The owner of 54 U.S. daily newspapers said Jan. 15 that it would seek to reorganize its finances in bankruptcy court.

MediaNews, based in Denver, says its newspapers, which include The Denver Post and the San Jose Mercury News, and 8,700 employees won’t be affected during the bankruptcy proceedings. The company also owns four radio stations in Texas and a television station in Alaska.

Privately held Affiliated Media worked with its major lenders and shareholders during the past year to hammer out a plan aimed at shortening the company’s stay in federal bankruptcy court in Delaware. Affiliated hopes to emerge from bankruptcy protection within two months.

The plan calls for Affiliated’s debt to fall to $179 million from $930 million, according documents filed late Friday and early Saturday.

In exchange for this $751 million concession, a group of lenders led by Bank of America will become the company’s majority owners with 89 percent of the common stock, according to a disclosure statement filed Saturday. The remaining 11 percent goes to MediaNews’ management team, which is led by William Dean Singleton, who is also chairman of The Associated Press. The MediaNews executives will receive warrants that eventually could boost their combined stakes to 20 percent.

Heading into the bankruptcy filing, Singleton held a roughly 30 percent stake in Affiliated.

Richard Scudder, who co-founded MediaNews with Singleton in 1985, will relinquish his interests in the company to the lenders. Another major newspaper publisher, Hearst Corp., also will surrender a 30 percent stake it acquired in Affiliated’s newspapers outside the San Francisco Bay area as part of a complex $317 million deal in 2006.

Singleton will continue to run MediaNews, signaling the lenders remain confident in him despite the company’s recent struggles.

The decision probably stems from Singleton’s reputation as a hard-nosed businessman who has never shied away from cutting costs, said Alan Mutter, a former newspaper editor who blogs on the media business.

"Who do we know who can go in and run the hell out of a newspaper and make a buck?" he said. "The only answer is William Dean Singleton."

MediaNews spokesman Seth Faison declined to comment late Friday.

"By aggressively facing the challenges of the newspaper business, we will continue to deliver high-quality journalism and will prepare our newspapers for a promising future," Singleton said in a statement Friday.

Affiliated’s annual revenue has fallen by $270 million, or 20 percent, during the past two fiscal years, according to court documents.

To cushion the financial blow, Singleton has reduced Affiliated’s expenses by $385 million, or 31 percent, since the end of 2006, according to court documents.

Affiliated still lost $582 million as revenue fell 10 percent to $1.06 billion in its last fiscal year ending June 30, the documents show. That came on top of a $406 million loss in the previous fiscal year. The losses stemmed from accounting charges taken to reflect the crumbling value of its newspapers.

Despite Affiliated’s troubles, Singleton says all but one of the company’s newspapers are profitable. He hasn’t identified which one is losing money.

But Singleton couldn’t figure out a way to cope with all the debt that MediaNews took on to expand into new markets. Like other publishers, Singleton borrowed heavily before the Internet and recent recession began to devour the newspaper’s main source of income — advertising.

Affiliated is bracing for more tight times ahead. In a disclosure statement, the company discusses possible savings from farming out some production, newsroom and administrative jobs and imposing permanent wage cuts at some newspapers beginning this year.

The reorganization plan calls for Singleton to receive a $634,000 salary and an annual bonus of up to $500,000 as Affiliated’s chief executive. He will also continue to be paid $360,000 annually under a separate agreement with The Denver Post Corp., according to court documents.

MediaNews - The latest old media woes

MediaNews, one of the nation's largest newspaper companies, is also the latest to file Chapter 11. As I e-mailed a friend, Dean Singleton may have done a great job of building up MediaNews, but as chairman of AP, he was pretty clueless about how to monetize online newspapers, and related matters.

Paywalling, for example, is one matter.

Point No. 1, even before Deano became AP's chair? When newspapers said look at the "TV model for online papers, did they forget there was such a thing as cable TV? Let alone premium cable?

Point No. 2, on specific, why didn't AP jack rates for Yahoo, Google, MSN, et al high enough to potentially force them to paywall content, therefore giving member newspapers protection to paywall?

Point No. 3 - As both owner of a major newspaper company and AP chairman, why didn't he recognize that, on this issue, AP and its member newspapers are somewhat at cross interests?

Issue No. 2 is general business management.

Point No. 1? If you're not going to paywall locally generated content as well as AP written news, why do you post it online even before your print newspapers come out? (This is not specific to Singleton, BTW.) If online newspapers aren't "monetized" yet, this is a handout. It's like if Campbell's started selling its soup in plastic bottles as well as cans, and said that because the plastic bottles were made more quickly, it would give them away for free.

Anyway, that's a few thoughts for now.

MediaNews’ I-News sounds like DMN’s CueCat

So MediaNews is starting what it calls an “Individuated News: personalized newspaper?

Peter Vandevanter, vice president of targeted products for MediaNews Group, told the World Association of Newspapers (WAN) “The Power of Print Conference” that the subscribers will get home delivery of a printed paper, through home printers or portable devices, with content personalized to their demands and including hyper-targeted advertising and coupon offers.

So, on the ad side, MediaNews and Dean Singleton are trying to out-Google Google and Sergey Brin? Good luck with that. Coupons? BFD. Everybody knows their use rate is in single digits.

If I want to read hardcopy, I can just go to a webpage and hit “print” if I have a home printer. If it doesn’t correctly format for 8.5x11, I can copy the text and paste in a Word document. Plus, if I have ad-block settings and/or a good hosts file, I don’t get any of Singleton’s ads.

What moronity.

But wait, that’s not ALL the moronity. The MediaNews printer ain’t a freebee:

Subscribers buy the printer at a deep discount and pay a “modest” subscription fee, Vandenvanter told Mitchell. The newspaper reimburses subscribers for the consumable. Advertisers pay the newspaper for targeted ads.

Even THAT isn’t all the moronity. Allegedly, advertising rates for the I-News product “are 10 times print advertising rates.”

Good luck with that one!

Newspaper cartelization gets well-deserved kick in the teeth

As Editor and Publisher reports, Hearst and MediaNews have gotten a federal smackdown, courtesy of a settled lawsuit, over their attempt to cartelize to monopolize Bay Area newspaper control.

The Oakland Tribune, the Fremont Argus and other smaller San Francisco Bay Area dailies will “stay alive” only because of the settlement reached Wednesday, said the head lawyer for Clint Reilly, whose lawsuit had accused Hearst Corp. and MediaNews Group of scheming to monopolize the region’s newspaper market.

“The smaller local papers will be able to survive now,” [lawyer] Alioto told E&P in an interview after the settlement announcement.

“The Oakland Tribune, the Fremont Argus, San Mateo (County Times), (The Daily Review in) Hayward, Novato (Marin Independent Journal) — all of those papers were heading for the graveyard,” Alioto added. “There was pretty strong evidence those papers were going to go out. By reason of our agreement, I think, they’ll stay alive, at least for three years.”

Under the settlement, Hearst, which publishes the San Francisco Chronicle, and MediaNews agreed not to collaborate on national advertising, Internet advertising, sales, distribution or production in the Bay Area, Alioto said.

Of course, three years isn’t a lot. And Hearst is already spinning this deal.

A Hearst statement said the settlement mandates “certain changes” in the complex Bay Area deal between Hearst and MediaNews. Hearst said the two chains “had already decided to make most of these changes during the course of the Hart-Scott-Rodino review by the Department of Justice. The changes have no material effect on Hearst’s investment in the non-Bay Area assets of MediaNews Group.”

Sure. Two newspaper companies this big wouldn’t have settled this lawsuit unless they knew it was highly likely they would lose.

And, it did block further metastasis of Big Media:

The settlement also rescinds Hearst's right to convert its interest in MediaNews properties outside the Bay Area into a direct investment in the Denver-based company.

Unfortunately, it didn’t reverse MediaNews’ purchase of former McClatchey papers in the Bay Area last year, the deal that started this whole MediaNews-Hearst cartel rolling:

The settlement does not give Reilly the thing he was asking the court to do: Unwind MediaNews’ complex $736 million purchase of the San Jose Mercury News and the Contra Costa Times. MediaNews bought the papers last June from The McClatchy Co., which acquired them as part of its acquisition of Knight Ridder Inc. Hearst also bought two former Knight Ridder papers, one in the Bay Area, the Monterey County Herald, and the other a competitor to the Minneapolis Star Tribune, then owned by McClatchy, the St. Paul Pioneer Press. Hearst also bought a southern California paper, the Daily Breeze in Torrance in a $288 million deal.

Hearst then agreed to turn ownership of the three papers over to MediaNews in exchange for equity in MediaNews' non-Bay Area properties.

So, that three years? It’s probably more a stay of execution than a parole, let alone an actual pardon. And, that’s sad. The Trib, especially, needs to remain alive as an independent seven-day voice for the East Bay.